RJ reverses losses, returns to profitability in 2019, says CEO

27-04-2019 06:36 AM

Ammon News - AMMONNEWS - Royal Jordanian (RJ) has managed to curb losses and turn to profitability after enhancing work efficiency and sales, reducing operating costs and maintaining its 3,800 staff.

Based on an expected record performance for Q1, 2019, Stefan Pichler, President and CEO of RJ, anticipates the airline to break even between revenues and expenses during H1 2019.

In an interview with Petra, Pichler added that in 2018, the national carrier registered 2.5 percentage points growth in passenger seat load factor to mark a record level of 73.8%. Last year, work efficiency rose 9% as a result of boosting unit revenues by 5% and lowering unit costs by 4% upon reviewing aircraft leasing agreements and other contracts.

Moreover, Pichler elaborated that operating profits surged by 47% during 2018 to JD19 million as opposed to JOD 12 million in 2017. However, despite the significant improvement, losses remained prevalent due to those accumulated during previous years. Pichler emphasized that preliminary indicators for Q1 2019 are "very positive, witnessing impressive growth and marking the period as the strongest in RJ history."

Pichler stated that RJ will proceed with reducing expenses related to aircraft leasing and will work on a five-to-six-year replacement plan for the 19 short haul aircraft. Pichler added that RJ management is currently in the process of reviewing two out of several alternative proposals, with the selected proposal being announced next June.

On another note, Pichler explained: "It is difficult for us to cut a significant number of staff in the current environment, as we are also partly accountable for the wellbeing of their families and this country at large. Nonetheless, we will be improving the productivity of each employee by bolstering sales, and recruitment will be implemented only as needed."

Last year, employee productivity went up 7%, with passenger seat load factor reaching 73.8% compared to 71.2% and 66% in 2017 and 2016, respectively - which is the highest for RJ in the last 10 years.

"For us, the most important standard is safety, followed by profitability and strong cash flow. We are designing products that cater to the needs of customers. What makes our guests choose Royal Jordanian is our flight schedules, on-time performance, set of destinations and established alliances that connect us with nearly every spot around the world. Doing this right will impact our revenues, costs and profits," said Pichler.

Pichler revealed that in the past year, the airline has returned to operating profitability. This was achieved by reducing costs and enhancing operational efficiency, consequently retaining employees and avoiding staff terminations - as other major companies across the Kingdom have done, particularly those that were privatized.

RJ directly contributes 3% to GDP and indirectly contributes approximately 28% through aviation related services such as maintenance, supplies, catering and others.

Commenting further, Pichler stated: "In 2015, Royal Jordanian’s capital was restructured. However, what has led the airline to its recent predicament was the negative performance on the operational level and the lack of commercial performance, and finally, the lack of some instruments like fuel hedging. We were efficient in terms of managing and flying the aircraft, but we were inefficient in terms of commercial management."

By the end of 2018, RJ reached 44 direct destinations across 4 continents via 24 aircraft - and employed 3,800 staff, 321 of whom are based at outstations.

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